Digi International Reports Second Fiscal Quarter 2013 Results

  Digi International Reports Second Fiscal Quarter 2013 Results

               Forty-First Consecutive Quarter of Profitability

  Meets Street Revenue and EPS Consensus Estimates for Second Fiscal Quarter
                                     2013

Business Wire

MINNEAPOLIS -- April 25, 2013

Digi International® Inc. (NASDAQ: DGII, www.digi.com) reported revenue of
$48.2 million for the second fiscal quarter of 2013, compared with $49.0
million for the second fiscal quarter of 2012. Net income was $1.0 million, or
$0.04 per diluted share, in the second fiscal quarter of 2013 compared to $2.1
million, or $0.08 per diluted share, in the year ago comparable quarter.
Reported net income in the second fiscal quarter of 2013 was unfavorably
impacted by a legal settlement with U.S. Ethernet Innovations, LLC of $1.0
million, net of taxes, or $0.04 per diluted share.

”We have spent significant time this quarter in strategically focusing the
Digi team to be the premier provider of M2M solutions,” said Joe Dunsmore,
President and Chief Executive Officer. “The reception from potential customers
and partners in the salesforce.com ecosystem has been very positive. We see
momentum building around our solutions combining Digi's deep device expertise
with Etherios' ability to integrate devices directly into an organization's
core business processes.”

Below is a table setting forth certain GAAP and Non-GAAP results:

GAAP Results
(in thousands,
except per share      Q2 2013     Q2 2012     YTD 2013    YTD 2012
data)
Net Sales                $ 48,197       $ 49,016       $ 95,188       $ 95,678
Operating Income         $ 419          $ 3,429        $ 2,091        $ 4,245
Net Income               $ 1,000        $ 2,122        $ 2,230        $ 2,846
Net Income per           $ 0.04         $ 0.08         $ 0.08         $ 0.11
Diluted Share
                                                                      

Non-GAAP Results*
(in thousands,
except per share        Q2 2013    Q2 2012    YTD 2013    YTD 2012
data)
Operating Income           $1,907        $3,489        $3,579         $4,541
Net Income                 $1,591        $2,161        $2,677         $2,827
Net Income per             $0.06         $0.08         $0.10          $0.11
Diluted Share

* A table with a detailed reconciliation to non-GAAP information is provided
later in this earnings release.

Business Results for the Three Months Ended March 31, 2013

Revenue from growth products and services in the second fiscal quarter of
2013, including $2.4 million of revenue from Etherios' consulting services,
was $27.2 million, or 56.4% of net sales, compared to $26.4 million, or 53.9%
of net sales, in the second fiscal quarter of 2012, an increase of $0.8
million, or 2.9%. Revenue from mature products was $21.0 million, or 43.6% of
net sales, in the second fiscal quarter of 2013 compared to $22.6 million, or
46.1% of net sales, in the second fiscal quarter of 2012, a decrease of $1.6
million, or 7.1%. Digi's growth products portfolio includes Etherios'
consulting services, all wireless products, as well as the ARM-based embedded
module product line, which leverages the Device Cloud by Etherios™ platform
with both wired and wireless connectivity.

Revenue in North America was $28.6 million in the second fiscal quarter of
2013, compared to $29.0 million in the second fiscal quarter of 2012, a
decrease of $0.4 million, or 1.3%. Revenue in EMEA (Europe, Middle East and
Africa) was $11.9 million in the second fiscal quarter of 2013, compared to
$12.1 million in the comparable quarter a year ago, a decrease of $0.2
million, or 1.9%. Revenue in Asian countries was $6.3 million in the second
fiscal quarter of 2013 compared to $6.2 million in the second fiscal quarter
of 2012, an increase of $0.1 million, or 1.5%. Latin American revenue was $1.4
million in the second fiscal quarter of 2013 compared to $1.7 million in the
comparable quarter a year ago, a decrease of $0.3 million, or 17.5%.

In the second fiscal quarter of 2012, Digi recorded revenue of approximately
$3.0 million that was delayed from the first fiscal quarter of 2012 as a
result of the flooding in Thailand that took place in October 2011, impacting
the operations of Digi's contract manufacturer near Bangkok.

Gross profit was $25.0 million in the second fiscal quarter of 2013 compared
to $25.8 million in the same period of the prior year, a decrease of $0.8
million, or 3.2%. The gross margin was 51.8% in the second fiscal quarter of
2013 compared to 52.6% in the second fiscal quarter of 2012. The gross margin
was lower in the second fiscal quarter of 2013 than in the comparable period a
year ago primarily due to the inclusion of gross margins from Etherios'
consulting services that are generally lower than Digi's products margins.

Total operating expenses in the second fiscal quarter of 2013 were $24.5
million, or 50.9% of revenue, compared to $22.4 million, or 45.6% of revenue,
in the second fiscal quarter of 2012. The general and administrative expenses
portion of operating expenses was unfavorably impacted by $1.5 million in the
second fiscal quarter of 2013 compared to the same quarter in the prior year
due to a settlement of a patent infringement lawsuit with U.S. Ethernet
Innovations, LLC. Operating expenses also increased in the second fiscal
quarter of 2013 compared to the second fiscal quarter of 2012 due to
incremental operating expenses for Etherios, partially offset by cost
containment measures that were put in place to achieve targeted expense
levels.

Digi reported operating income of $0.4 million, or 0.9% of net sales, in the
second fiscal quarter of 2013 compared to $3.4 million, or 7.0% of net sales,
in the second fiscal quarter of 2012. Operating income for the second fiscal
quarter of 2013 included the settlement of a patent infringement lawsuit of
$1.5 million. Please refer to the table reconciling operating income to
non-GAAP operating income which is provided later in this earnings release.

Net income was $1.0 million in the second fiscal quarter of 2013, or $0.04 per
diluted share, compared to $2.1 million, or $0.08 per diluted share, in the
second fiscal quarter of 2012. Net income in the second fiscal quarter of 2013
included a charge for the settlement of a patent infringement lawsuit of $1.0
million, net of taxes, or $0.04 per diluted share. This was partially offset
by a tax benefit of $0.4 million, or $0.01 per diluted share, resulting from
the enactment of legislation extending the research and development tax credit
that allowed Digi to record tax credits for the last three quarters of fiscal
2012 in the second quarter of fiscal 2013, based on the enactment date of
January 2, 2013. Please refer to the table reconciling net income and net
income per diluted share to non-GAAP net income and net income per diluted
share which is provided later in this earnings release.

Earnings before interest, taxes, depreciation and amortization in the second
fiscal quarter of 2013 were $2.8 million, or 5.9% of revenue, compared to $5.5
million, or 11.1% of revenue in the second fiscal quarter of 2012.

Business Results for the Six Months Ended March 31, 2013

For the six months ended March 31, 2013, Digi reported revenue of $95.2
million compared to revenue of $95.7 million for the six months ended March
31, 2012.

Revenue from growth products and services for the first six months of fiscal
2013 was $53.0 million, or 55.7% of net sales, compared to $50.2 million, or
52.5% of net sales, in the first six months of fiscal 2012, an increase of
$2.8 million, or 5.6%, and includes consulting services revenue from Etherios
since the date of acquisition on October 31, 2012 of $3.9 million. Revenue
from mature products was $42.2 million, or 44.3% of net sales, in the first
six months of fiscal 2013 compared to $45.5 million, or 47.5% of net sales, in
the first six months of fiscal 2012, a decrease of $3.3 million, or 7.3%.

For the six months ended March 31, 2013, Digi reported net income of $2.2
million, or $0.08 per diluted share, compared to net income for the six months
ended March 31, 2012 of $2.8 million, or $0.11 per diluted share. Reported net
income was unfavorably impacted for the first six months of fiscal 2013 as a
result of the aforementioned patent infringement settlement of $1.0 million,
or $0.04 per diluted share, partially offset by a benefit of $0.5 million, or
$0.02 per diluted share, resulting from the enactment of legislation extending
the research and development tax credit, allowing Digi to record tax credits
earned during the last three quarters of fiscal 2012 in the second quarter of
fiscal 2013 and the reversal of tax reserves for the expiration of the statute
of limitations for various U.S. and foreign jurisdictions' tax matters. Net
income for the first six months of fiscal 2012 benefited by $0.2 million, or
$0.01 per diluted share, resulting from a reversal of tax reserves for various
jurisdictions' tax matters and the gain on sale of an investment, net of
taxes, offset by expenses of $0.2 million, net of taxes, or $0.01 per diluted
share, as a result of the restructuring charge for the Breisach, Germany
manufacturing operations.

Digi's cash and cash equivalents and marketable securities balance, including
long-term marketable securities, was $101.9 million at March 31, 2013, a
decrease of $2.9 million from December 31, 2012. Digi repurchased 249,647
shares of its common stock for $2.4 million during the second fiscal quarter
of 2013. Please refer to the Condensed Consolidated Statements of Cash Flows
that are included in this earnings release for additional cash flow details.
At March 31, 2013, Digi's current ratio was 7.2 to 1 compared to 8.3 to 1 at
December 31, 2012.

Second Fiscal Quarter 2013 Business Highlights:

Personnel

  *Digi strengthened its sales organization with the appointment of Kevin C.
    Riley as senior vice president of sales. Riley provides years of solutions
    selling experience and will be instrumental in driving increased sales of
    M2M solutions and creating process improvement in the Digi sales
    organization.

Device Cloud by Etherios

  *Last week, Digi announced a rebrand of the iDigi Device Cloud® as Device
    Cloud by Etherios™, to be completed by the beginning of May. Etherios, a
    division of Digi International and Salesforce.com Cloud Alliance Platinum
    Partner, is a widely recognized cloud computing services provider with a
    longstanding track record of helping organizations realize their cloud
    strategy. The rebranding emphasizes the openness of the Device Cloud and
    that it is hardware manufacturer independent.
  *Digi enhanced the Etherios Device Cloud with the addition of carrier
    subscription management capabilities. Organizations can now create M2M
    applications, manage remote devices and oversee carrier subscriptions from
    more than 90 global carriers in one management interface.

Key Wireless Product Announcements

  *Continuing its leadership in wireless innovation, Digi launched the next
    generation of its XBee Wi-Fi module. It features native Etherios Device
    Cloud integration and other new features to enable rapid deployment of
    cloud-based M2M solutions.
  *Digi makes development of cloud-connected Android devices fast and easy
    with the introduction of the ConnectCard for i.MX28 module with Android.
    Based on Freescale Semiconductor technology, the product demonstrates
    Digi's commitment to Freescale Semiconductor.

Reconciliation Tables:

Reconciliation of Operating Income to Non-GAAP Operating Income
(In thousands of dollars)
                                                                                         
                      For the                 For the                                        
                      three                   three                   For the                 For the
                                                                      six                     six
                      months                  months                  months                  months
                      ended                  ended                  ended                  ended         
                      March 31,     % of      March 31,     % of      March 31,     % of      March 31,     % of
                                    net                     net                     net                     net
                      2013          sales     2012          sales     2013          sales     2012          sales
Operating             $ 419         0.9 %     $ 3,429       7.0 %     $ 2,091       2.2 %     $ 4,245       4.4 %
Income
Legal                 1,525         3.2 %     —             —         1,525         1.6 %     —             —
settlement
Restructuring         (37     )     —        60           0.1 %     (37     )     —        296          0.3 %
reserve
Non-GAAP
operating             $ 1,907      4.0 %     $ 3,489      7.1 %     $ 3,579      3.8 %     $ 4,541      4.7 %
income
*Percentages presented may not add due to use of rounded numbers.


                                                               
Reconciliation of Net Income and Net Income per Diluted Share
to Non-GAAP Net Income and Net Income per Diluted Share
(In thousands of dollars, except per share amounts)

                       Three months ended March 31,                  Six months ended March 31,
                       2013                  2012                   2013                  2012
Net income and
net income per         $ 1,000    $ 0.04     $ 2,122   $ 0.08     $ 2,230    $ 0.08     $ 2,846    $ 0.11
common share,
diluted
Legal
settlement,            991         0.04       —           —          991         0.04       —           —
net of taxes
Restructuring
reserve, net           (24     )   —          39          0.00       (24     )   —          192         0.01
of taxes
Gain on sale
of investment,         —           —          —           —          —           —          (88     )   0.00
net of taxes
Discrete tax
benefits for
extended
research and
development
tax
credit
recorded in
the second
quarter of
fiscal 2013
and reversal
of tax
reserves for
closure of
various
jurisdictions’         (376    )   (0.01  )   —          —         (520    )   (0.02  )   (123    )   0.00
tax matters
Non-GAAP net
income and net
income per
diluted share          $ 1,591    $ 0.06    $ 2,161    $ 0.08    $ 2,677    $ 0.10    $ 2,827    $ 0.11
*
Diluted
weighted                           26,476                26,205                26,474                26,172
average common
shares
*Earnings per share presented are calculated by line item and certain amounts may not add due to use of
rounded numbers.
                                                                                                        

                                                                                             
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization
(In thousands of dollars)
                                                                                                        
                                                                                                        
                   For the                 For the                                        
                   three                   three                   For the                 For the
                                                                   six                     six
                   months                  months                  months                  months
                   ended                  ended                  ended                  ended        
                   March 31,    % of net   March 31,    % of net   March 31,    % of net   March 31,    % of net
                   2013        sales     2012        sales      2013         sales      2012         sales
Net sales          $ 48,197    100.0 %    $ 49,016    100.0 %    $ 95,188    100.0 %    $ 95,678    100.0 %
Net income         1,000        2.1   %    2,122        4.3   %    2,230        2.3   %    2,846        3.0   %
Interest           (13      )   —     %    (59      )   (0.1  )%   (65      )   (0.1  )%   (131     )   (0.1  )%
income, net
Income tax
(benefit)          (130     )   (0.3  )%   1,374        2.8   %    488          0.5   %    1,685        1.8   %
provision
Depreciation
and                1,990       4.1   %    2,014       4.1   %   3,909       4.1   %    4,043       4.2   %
amortization
Earnings
before
interest,
taxes,
depreciation
and
amortization       $ 2,847     5.9   %    $ 5,451     11.1  %   $ 6,562     6.9   %    $ 8,443     8.8   %
*
*Percentages may not add due to use of rounded numbers.
                                                                                                              

Fiscal 2013 Guidance

For the third fiscal quarter of 2013, Digi projects revenue in a range of $48
million to $50 million. Digi projects net income per diluted share in a range
of $0.05 to $0.07.

For the fourth fiscal quarter of 2013, Digi projects revenue in a range of $50
million to $54 million. Net income per diluted share is projected to be in a
range of $0.06 to $0.11.

Second Fiscal Quarter 2013 Conference Call Details

Digi invites all those interested in hearing management's discussion of its
quarter, on Thursday, April 25, 2013 after market close at 5:00 p.m. EDT (4:00
p.m. CDT), to join the call by dialing (866) 515-2914 and entering passcode
80263290. International participants may access the call by dialing (617)
399-5128 and entering passcode 80263290. A replay will be available two hours
after the completion of the call, and for one week following the call, by
dialing (888) 286-8010 for domestic participants or (617) 801-6888 for
international participants and entering access code 75895203 when prompted.
Participants may also access a live webcast of the conference call through the
investor relations section of Digi's website, www.digi.com. The webcast will
remain on our website for one week after the live session is completed.

A copy of this earnings release can be accessed through the financial releases
page of the investor relations section of Digi's website at www.digi.com.

About Digi International

Digi International is the M2M expert, combining products and services as
end-to-end solutions to drive business efficiencies. Digi provides the
industry's broadest range of wireless products, a cloud computing platform
tailored for devices and development services to help customers get to market
fast with wireless devices and applications. Digi's entire solution set is
tailored to allow any device to communicate with any application, anywhere in
the world. For more information, visit Digi's website at www.digi.com, or call
877-912-3444.

Forward-Looking Statements

This press release contains forward-looking statements that are based on
management's current expectations and assumptions. These statements often can
be identified by the use of forward-looking terminology such as "anticipate,"
"believe," "estimate," "may," "will," "expect," "plan," "project," "should,"
or "continue" or the negative thereof or other variations thereon or similar
terminology. Among other items, these statements relate to expectations of the
business environment in which the company operates, projections of future
performance, perceived marketplace opportunities and statements regarding our
mission and vision. Such statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions, including risks
related to the highly competitive market in which our company operates, rapid
changes in technologies that may displace products sold by us, declining
prices of networking products, our reliance on distributors and other third
parties to sell our products, delays in product development efforts,
uncertainty in user acceptance of our products, the ongoing shift of our sales
efforts to focus more on the delivery of broader based solutions which can be
a more complex sales process, has not been a historical sales focus of our
company and can involve longer sales cycles than the sale of our legacy
hardware products, the ability to integrate our products and services with
those of other parties in a commercially accepted manner, potential
liabilities that can arise if any of our products have design or manufacturing
defects, our ability to defend or settle satisfactorily any litigation,
uncertainty in global economic conditions and economic conditions within
particular regions of the world which could negatively affect product demand
and the financial solvency of customers and suppliers, the impact of natural
disasters and other events beyond our control that could negatively impact our
supply chain and customers, the ability to achieve the anticipated benefits
and synergies associated with acquisitions such as our recently announced
purchase of Etherios, Inc., and changes in our level of revenue or
profitability which can fluctuate for many reasons beyond our control. These
and other risks, uncertainties and assumptions identified from time to time in
our filings with the Securities and Exchange Commission, including without
limitation, our annual report on Form 10-K for the year ended September 30,
2012 and subsequent quarterly reports on Form 10-Q and other filings, could
cause the company's future results to differ materially from those expressed
in any forward-looking statements made by us or on our behalf. Many of such
factors are beyond our ability to control or predict. These forward-looking
statements speak only as of the date for which they are made. We disclaim any
intent or obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.

Presentation of Non-GAAP Financial Measures

This release includes historical non-GAAP operating income and net income and
net income per diluted share data, and earnings before interest, taxes,
depreciation and amortization (EBITDA).

We understand that there are material limitations on the use of non-GAAP
measures. Non-GAAP measures are not substitutes for GAAP measures, such as
operating income or net income, for the purpose of analyzing financial
performance. The disclosure of these measures does not reflect all charges and
gains that were actually recognized by the company. These non-GAAP measures
are not in accordance with, or an alternative for measures prepared in
accordance with, generally accepted accounting principles and may be different
from non-GAAP measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules or
principles. We believe that non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with our results of operations as
determined in accordance with GAAP and that these measures should only be used
to evaluate our results of operations in conjunction with the corresponding
GAAP measures. Additionally, we understand that EBITDA does not reflect our
cash expenditures, the cash requirements for the replacement of depreciated
and amortized assets, or changes in or cash requirements for our working
capital needs.

We believe that providing historical and adjusted operating income and net
income and net income per diluted share exclusive of legal settlements,
restructuring expenses, gain on sale of investments, and reversals of tax
reserves and discrete tax benefits permits investors to compare results with
prior periods that did not include these items. Management uses the
aforementioned non-GAAP measures to monitor and evaluate ongoing operating
results and trends and to gain an understanding of our comparative operating
performance. In addition, certain of our stockholders have expressed an
interest in seeing financial performance measures exclusive of the impact of
matters such as the impact of decisions relating to taxes and restructuring,
which while important, are not central to the core operations of our business.
We believe that the presentation of EBITDA as a percentage of net sales is
useful to investors because it provides a reliable and consistent approach to
measuring our performance from year to year and in assessing our performance
against that of other companies. We believe this information helps investors
compare operating results and corporate performance exclusive of the impact of
our capital structure and the method by which assets were acquired. EBITDA is
used as an internal metric for executive compensation, as well as incentive
compensation for the rest of the employee base, and it is monitored quarterly
for these purposes.

                                              
Digi International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                       
                             Three months ended        Six months ended March
                             March 31,                 31,
                             2013        2012         2013        2012
Net sales                    $ 48,197     $ 49,016     $ 95,188     $ 95,678
Cost of sales                23,236     23,233      45,748      45,465   
Gross profit                 24,961       25,783       49,440       50,213
Operating
expenses:
Sales and                    10,414       10,340       20,688       20,439
marketing
Research and                 7,775        7,753        15,192       15,985
development
General and                  6,390        4,201        11,506       9,248
administrative
Restructuring                (37      )  60          (37      )   296      
Total
operating                    24,542     22,354      47,349      45,968   
expenses
Operating                    419          3,429        2,091        4,245
income
Other income
(expense),
net:
Interest                     50           74           102          146
income
Interest                     (37      )   (15      )   (37      )   (15      )
expense
Other income,                438        8           562         155      
net
Total other                  451        67          627         286      
income, net
Income before                870          3,496        2,718        4,531
income taxes
Income tax
(benefit)                    (130     )  1,374       488         1,685    
provision
Net income                   $ 1,000    $ 2,122     $ 2,230     $ 2,846  
Net income per
common share:
Basic                        $ 0.04     $ 0.08      $ 0.09      $ 0.11   
Diluted                      $ 0.04     $ 0.08      $ 0.08      $ 0.11   
Weighted
average common
shares:
Basic                        26,138     25,709      26,163      25,674   
Diluted                      26,476     26,205      26,474      26,172   
                                                                             

                                                  
Digi International Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(In thousands)
(Unaudited)
                                                       
                        Three months ended March 31,   Six months ended March
                                                       31,
                        2013            2012          2013         2012
Net income              $  1,000        $  2,122     $  2,230     $ 2,846 
Other
comprehensive
income (loss),
net of tax:
Foreign currency
translation             (3,090     )     (139      )   (3,379    )   (1,922  )
adjustment
Change in net
unrealized (loss)       (61        )     64            (59       )   87
gain on
investments
Less income tax
benefit                 24               (25       )   23            (34     )
(provision)
Reclassification
of realized loss
on investments          —                —             —             12
included in net
income (1)
Less income tax         —               —            —            (5      )
benefit (2)
Other
comprehensive           (3,127     )     (100      )   (3,415    )   (1,862  )
loss, net of tax
Comprehensive           $  (2,127  )     $  2,022     $  (1,185 )   $ 984   
(loss) income

(1)   Recorded in Other income, net in our Condensed Consolidated Statement
        of Operations.
(2)     Recorded in Income tax (benefit) provision in our Condensed
        Consolidated Statements of Operations.
        

                                                       
Digi International Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                                 
                                             March 31,           September 30,

                                             2013                2012
ASSETS
Current assets:
Cash and cash equivalents                    $   42,357        $   60,246
Marketable securities                        37,401              58,372
Accounts receivable, net                     23,857              24,634
Inventories                                  25,799              24,435
Deferred tax assets                          3,472               3,389
Other                                        5,925              2,493
Total current assets                         138,811             173,569
Marketable securities,                       22,105              2,016
long-term
Property, equipment and                      15,107              15,157
improvements, net
Identifiable intangible                      11,938              10,629
assets, net
Goodwill                                     102,473             86,209
Deferred tax assets                          4,636               5,010
Other                                        526                494
Total assets                                 $   295,596      $   293,084
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable                             $     7,387         $   6,040
Income taxes payable                         —                   1,269
Accrued compensation                         5,789               5,744
Accrued warranty                             925                 1,021
Accrued legal settlement                     1,525               —
Other                                        3,562              4,118
Total current liabilities                    19,188              18,192
Income taxes payable                         3,363               3,294
Deferred tax liabilities                     489                 630
Other noncurrent liabilities                 100                111
Total liabilities                            23,140              22,227
                                                                 
Total stockholders’ equity                   272,456            270,857
Total liabilities and                        $   295,596      $   293,084
stockholders’ equity
                                                                     

                                     
Digi International Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                           
                                           Six months ended
                                           March 31,
                                           2013              2012
Operating activities:
Net income                                 $   2,230          $   2,846
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation of property,                  1,705                1,606
equipment and improvements
Amortization of identifiable               2,204                2,437
intangible assets
Stock-based compensation                   1,914                1,886
Excess tax benefits from                   (53          )       (67          )
stock-based compensation
Deferred income tax benefit                (1,079       )       (1,173       )
Bad debt/product return                    285                  338
provision
Inventory obsolescence                     554                  776
Restructuring                              —                    296
Other                                      (307         )       (117         )
Changes in operating assets and            (4,103       )       (2,720       )
liabilities (net of acquisition)
Net cash provided by operating             3,350               6,108        
activities
Investing activities:
Purchase of marketable                     (37,337      )       (41,640      )
securities
Proceeds from maturities of                38,161               30,566
marketable securities
Proceeds from sale of investment           —                    135
Acquisition of business, net of            (12,919      )       —
cash acquired
Purchase of property, equipment,
improvements and certain other             (2,080       )       (2,650       )
intangible assets
Net cash used in investing                 (14,175      )       (13,589      )
activities
Financing activities:
Excess tax benefits from                   53                   67
stock-based compensation
Proceeds from stock option plan            590                  521
transactions
Proceeds from employee stock               248                  568
purchase plan transactions
Purchase of treasury stock                 (6,765       )       —            
Net cash (used) provided by                (5,874       )       1,156
financing activities
Effect of exchange rate changes            (1,190       )       (621         )
on cash and cash equivalents
Net decrease in cash and cash              (17,889      )       (6,946       )
equivalents
Cash and cash equivalents,                 60,246              54,684       
beginning of period
Cash and cash equivalents, end             $   42,357        $   47,738 
of period
                                                                
Supplemental schedule of
non-cash investing activities:
Issuance of common stock for               $   (6,804 )       $   —      
business acquisition
Securities purchased, not                  $   —             $   (3,600 )
settled
                                                                             

Contact:

Investors:
Digi International
Steve Snyder, 952-912-3637
steve.snyder@digi.com
or
Dian Griesel Inc.
Tom Caden, 212-825-3210
tcaden@dgicomm.com
or
For more information, visit our Web site at www.digi.com, or call 877-912-3444
(U.S.) or 952-912-3444 (International).
 
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